EUROPEAN PARLIAMENT THINK TANK – TOPICAL DIGESTOctober 2017

Organised by the European Commission and the European Committee of the Regions on 9-12 October 2017, this year’sEuropean Week of Regions and Cities (EWRC) will be focusing on the theme of Regions and Cities working for a betterfuture. Celebrating its 15th anniversary this year, the EWRC has grown to become the world's largest regionaldevelopment event, bringing together local and regional representatives, beneficiaries of EU policy, and EU institutions,for four days of workshops and debate. As discussions get under way on the future of cohesion policy post-2020, thisyear’s Week of Regions and Cities provides Europe’s regions and cities with a unique platform to put forward the localperspective on the future shape of cohesion policy. The three main areas covered this year are: building resilient regionsand cities, regions and cities as change agents, and sharing knowledge to deliver results. This Topical Digest contains aselection of briefings produced by EPRS on regional and cohesion policy.

Challenges for EU cohesion policy – Issues in the forthcoming post-2020 reformBriefing by Vasilis Margaras, European Parliamentary Research Service, September 2017The debate on the shape of the post-2020 cohesion policy is well under way. Stakeholders have identified a numberof principal issues or questions in this regard, relating to the operation of the policy itself as well as its impact andrelationship with other EU polices. These include how cohesion policy can best contribute to the twin objectives ofcompetitiveness and cohesion, the issue of how to identify the most efficient form of support, and the way in whichcohesion policy addresses new or growing challenges such as migration. Simplification of the policy for beneficiaries,flexibility, the importance of achieving better governance, and the contribution of cohesion policy to the EU'seconomic governance are all widely debated as well, while the UK’s departure from the EU will likely have a significantimpact on the EU budget and on the financial envelope for cohesion policy. The European Commission has publisheda number of white papers on the future of the EU that provide further ideas for reflection on the overall functioningand priorities of the Union. These reflections also have repercussions for cohesion policy.

Delivering the Urban Agenda for the EUBriefing by Christiaan van Lierop, European Parliamentary Research Service, September 2017Our towns and cities are home to nearly three quarters of the EU's population, and most EU policies concern them,be it directly or indirectly. With a shared vision of urban development having gradually taken shape at inter-governmental level, the European Commission launched a public consultation following its July 2014 communicationon the urban dimension of EU policies, which showed broad support among city stakeholders for an Urban Agendafor the EU. Parliament has also prepared an own-initiative report on the issue, as part of a process that led to thesigning of the Pact of Amsterdam on 30 May 2016, a clear political commitment to deliver an Urban Agenda. Pastmonths have seen visible progress in delivering the Urban Agenda. Recent developments include the publication ofbackground papers by four partnerships, whose action plans are expected soon, and the process looks set to expandfurther following the 2016 UN Habitat III conference in Quito, which identified the Urban Agenda for the EU as theEU’s main delivery mechanism for the UN's New Urban Agenda, a roadmap for global sustainable urban development.

Harnessing globalisation for local and regional authorities: Challenges and possible solutionsBriefing by Vasilis Margaras, European Parliamentary Research Service, September 2017Globalisation has various positive and negative aspects. On the positive side, economic opportunities can emerge.Exports may flourish, companies may find new global customers, knowledge may be easily circulated, and trade maypick up, thus stimulating economic growth. However, globalisation can also have disadvantages. For instance, variousEU industries (e.g. coal, steel, iron, shipbuilding, automotive and textiles) have been affected by global competition,and have had to downsize their activities. Cheap imports of non-EU manufactured goods have led to the decline ofvarious EU industrial sectors, but also to relocations, closures and redundancies. In addition, globalisation has anenvironmental, demographic, technological and cultural dimension. The impact of globalisation therefore affects theactivities and development of regional and local entities within the EU. In order to address all these issues, theEuropean Commission has presented a reflection paper on harnessing globalisation. This briefing addresses some ofthe most important challenges that globalisation brings to EU regions, with ideas for tackling these challenges.

Topical Digest

European Week of Regions and Cities

Cities: Front line of climate actionBriefing by Vivienne Halleux,, European Parliamentary Research Service, October 2017Cities have a crucial role to play in addressing the climate change challenge and delivering on the ambitions of theParis Agreement. In the European Union (EU), many cities are leading the way in this regard, taking action in threeareas central to increasing energy efficiency and reducing emissions – namely, buildings, energy supply, andtransport – and acting as living laboratories of climate-change-related innovation. The EU supports cities in theirefforts by providing guidance, promoting experience- and knowledge-sharing, fostering cooperation, and fundingclimate action. Climate-relevant initiatives are in place in various policy fields, the most high-profile being theCovenant of Mayors for Climate and Energy, which currently counts some 7 600 signatories. Easing access to climatefunding and strengthening the role of cities in climate governance are among the main challenges ahead, and themain demands of city associations. The latter issue is being examined by the European Parliament, notably in relationto the proposal for a regulation on energy union governance. Two own-initiative reports exploring the role citiesplay, first, in the implementation of the Paris Agreement, and, second, in the EU’s institutional framework, are alsounder preparation.

Implementation of macro-regional strategiesBriefing by Christiaan van Lierop, European Parliamentary Research Service, September 2017While each macro-regional strategy is unique in terms of the countries it brings together and the scope of its policies,they all share the same common aim: to ensure a coordinated approach to issues that are best tackled together.Building on the success of the pioneering 2009 European Union strategy for the Baltic Sea region, this form ofcooperation has since become firmly embedded in the EU's institutional framework, with four strategies now in place.Every two years, the European Commission publishes a report to assess the implementation of these strategies, mostrecently in 2016. With the views of stakeholders and other players helping to complete the picture, it is possible toidentify a number of challenges common to all macro-regional strategies, in areas such as governance, funding,political commitment and the need to be more result oriented. Parliament is also involved in this debate, with theCommittee on Regional Development now preparing a report on the implementation of macro-regional strategies.As plans for a new Carpathian strategy emerge, the importance of consolidating the position of macro-regionalstrategies within the future cohesion policy framework has arguably become more important than ever.

Partnership within cohesion policyBriefing by Christiaan van Lierop, European Parliamentary Research Service, September 2017Lying at the heart of the EU's cohesion policy, the partnership principle was strengthened in the 2014-2020 cohesionpolicy framework, with the Common Provisions Regulation requiring the creation of partnerships for all Europeanstructural and investment fund (ESIF) programmes and introducing a new European Code of Conduct on Partnership.Problems remain, however, with stakeholders voicing concerns about how partners are selected, the quality of theconsultation process and the low take-up of stakeholders' views, leading to calls for the partnership principle to bestrengthened post-2020. In June 2017, Parliament adopted a resolution on increasing engagement of partners andvisibility in the performance of European structural and investment funds. Appreciating the value that partnershipadds to the implementation of EU public policies, Parliament argues that the partnership principle and multi-levelgovernance model can contribute to better communication of EU policy objectives and results.

EU support for social entrepreneursBriefing by Agnieszka Widuto, European Parliamentary Research Service, March 2017Social enterprises combine social goals with entrepreneurial activity and make a valuable contribution to theeconomy and society, operating mainly in local communities, and covering areas such as education, healthcare, socialservices, work integration and environmental protection. They are also an increasingly popular choice for outsourcingcertain public services of general economic interest. Social enterprises encounter challenges in their operations,mostly related to regulatory obstacles and difficulties in accessing funding. At EU level the momentum gained by theSocial Business Initiative of 2011 is currently being supplemented by regulatory changes such as the review of theregulation on the European Social Entrepreneurship Funds, improving access to public procurement, and developingmethodologies for measuring social impact. The EU is also making efforts to improve funding opportunities, forinstance via the Social Impact Accelerator and the 'microfinance and social entrepreneurship' axis of the Employmentand Social Innovation programme. Expansion of the social economy, however, requires further development of asupportive regulatory environment, a tailored financial ecosystem, and also increased visibility and recognition.

Regional competitiveness in the EUBriefing by Agnieszka Widuto, European Parliamentary Research Service, July 2017Competitiveness has been an important issue on the EU’s agenda for several decades. Understood in a morecomprehensive way – as including both productivity and prosperity – it can be seen as a way to create favourablebusiness conditions for companies and to increase people’s living standards. In the 2016 edition of its RegionalCompetitiveness Index, the European Commission presents a ranking of regions according to their attractiveness forboth firms and residents. Data on the diverse dimensions of the Index, such as innovation, education and institutions,can help authorities to identify regional strengths and aspects to be improved. Increasing regional competitivenessis also a task relevant to EU cohesion policy. While the main role of EU regional funding is to ensure cohesion andreduce disparities between regions, competitiveness is important for supporting dynamic regional development.Therefore, the right balance in the policy mix between supporting competitiveness and convergence is required.

EFSI and ESI funds – Complementarity or contradiction?Briefing by Vasilis Margaras, European Parliamentary Research Service, January 2017Shortly after beginning its 2014-2019 mandate, the European Commission proposed a new Investment Plan forEurope, often referred to as the 'Juncker Plan'. It is based on three mutually reinforcing strands: firstly, the mobilisationof at least €315 billion in additional investment over the next three years, maximising the impact of public resourcesand unlocking private investment through the European Fund for Strategic Investment (EFSI); secondly, targetedinitiatives to ensure that this extra investment meets the needs of the real economy; and thirdly, measures to providegreater regulatory predictability and to remove barriers to investment. The European Parliament was generallypositive regarding EFSI, however, there were criticisms regarding its scope, remit and overall output in the Europeaneconomy. One of the issues raised in policy fora is the complex relationship between EFSI and the European structuraland investment funds as well as EFSI’s overall impact on the territorial cohesion objective of EU regional policy.

Financial instruments in cohesion policyBriefing by Agnieszka Widuto, European Parliamentary Research Service, December 2016With their use increasing in cohesion policy, financial instruments provide support for investment in the form of loans,guarantees, equity and other risk-sharing mechanisms. In the 2014-2020 programming period, they may be appliedin all thematic areas and funds covered by cohesion policy, combined with grants, while the amounts allocated areexpected to double in comparison to the previous period. Their revolving nature can increase the efficiency andsustainability of public funds in the long term and improve access to finance by targeting financially viable projectsthat have not been able to obtain sufficient funding from market sources. However, financial instruments can alsoentail high management costs and fees, as well as complex set-up procedures. Although financial instruments maybe a beneficial way to optimise the use of the cohesion budget, in some situations grants can be more effective. It isalso important to bear in mind that the primary goal of financial instruments is to support cohesion policy objectivesrather than just to generate financial returns. These considerations are likely to feed into the debate on the post-2020 cohesion policy.

Research for REGI Committee – Building Blocks for a Future Cohesion Policy: First ReflectionsStudy by European Parliament's Policy Department for Structural and Cohesion Policies, April 2017The reform of the EU budget and policy priorities in the post-2020 MFF comes at a difficult time for the EU, withmajor internal and external challenges. The challenges for economic, social and territorial cohesion remain profound.However, there are also competing pressures on the EU budget, such as keeping net payers’ contributions withinacceptable limits and striking the right balance between overarching EU goals and new challenges. Once again,cohesion policy is under pressure to justify its value in relation to EU political objectives. This study discusses themain themes relating to post-2020 cohesion policy, the rationale and overall framework of the policy, current andfuture challenges, and the post-2020 delivery system.

Research for REGI Committee – Cohesion policy and Paris Agreement TargetsStudy by European Parliament's Policy Department for Structural and Cohesion Policies, June 2017This study examines experience of the mainstreaming of climate policy objectives into cohesion policy in the current(2014-2020) and earlier programming periods, including with respect to its urban dimension, and to territorialcooperation. It identifies the implications of the Paris Agreement on climate change, and makes recommendationsfor further development of climate mainstreaming in cohesion policy in future programming periods.

Research for REGI Committee – Integrated use of ESI funds to address social challengesStudy by European Parliament's Policy Department for Structural and Cohesion Policies, July 2017The study aims to analyse the implementation of integrated approaches under the ESI funds in addressing challengesto social inclusion, such as integration of migrants and refugees. Programme logic of intervention, combinations ofthematic objectives, synergies with other EU policy instruments and the use of integrated tools are analysed for a setof programmes. Conclusions and recommendations are set out for 2014-2020 and the next programming period.

Research for REGI Committee – Indicators in Cohesion PolicyStudy by European Parliament's Policy Department for Structural and Cohesion Policies, May 2017GDP per capita is the sole criterion for identifying specific conditions of eligibility to benefit from the structural funds.This criterion does not really reveal the well-being of local people. This study examines alternative measures, such asfinal consumption expenses or a more sophisticated synthetic index, and their impact on the eligibility of the regions.The impact of the UK referendum is examined, using both the current criterion and alternative ones.

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EU regional Social Progress IndexRegions grouped according to sub-indices on basic human needs, foundations of well-being and opportunity

Source: European Commission, 2016.

Amount of ESIF funding channelled via financial instruments in 2007-2013 and 2014-2020 (€ million)

Data source: European Commission, 2015.